The whole idea behind having insurance is to have some form of guarantee in light of life’s uncertainties. Because most of these are unpredictable, it becomes very crucial to have some form of protection.
What are the many types of insurances?
By the time you start working, you would have heard of many types of insurance policies. You will be told or advised to plan for your retirement or your savings. But when you start planning your family, you begin to have more thoughts about protection your family. This is where you might be investing into fixed deposits, get into new plans and this is where a life insurance plan comes into play.
How important is a life insurance plan?
Many people are still unaware of the importance of having life insurance. In a recent survey, it was found that only slightly more than half of the total population are covered in this form. This is a very dangerous reality and needs to be addresses in the soonest time possible.
What exactly is life insurance?
When it comes to life insurance, the term death benefit is used. You pay a premium periodically to the insurance company so that in the event of death, your beneficiaries can continue with life in the least inconvenience. Besides that, some of the insurance providers combine death benefit with TPD or Total Permanent Disability. This is very important because it will help to protect your family if you suffer any form of disability which will cause you to be unable to continue working.
What’s the point of having life insurance?
Basically, a life insurance policy is in place to prepare your family in the worst-case situation. The basic idea here is to ensure that your loved ones will be able to continue financially should anything happen to you. The death benefit that comes with your policy will eventually replace your income so that your:
- Spouse can continue having some form of income to keep the home afloat like bills, rent and other expenses
- Kids can continue their education
Different types of life insurance
Not all insurance companies offer the same type of packages. There are several names or types to it but generally, they are in the following categories:
- Endowment – This is a combination of protection for you with some form of savings. In the event of death or TPD, the money will be paid.
- Investment – As the name implies, there is protection and some form of investment.
- Life annuity – This policy will ensure that the company will continue to pay after it matures until the holder passes away.
- MRTA – known as Mortgage Reducing Term Assurance, this policy helps to repay your outstanding property loan in the event of death. This is suitable to help lessen the burden of the family members
- Whole life insurance – This type of policy is costlier than term life insurance. It is commonly used for savings purposes and has quite high cash value at the end of the term.